One day the economists will have to sit down to write textbooks about President Obama’s economic legacy. Crayons and coloring books won’t be included, but they ought to be. The administration’s policies are all built around simplistic concepts of governing that hardly ever work in the real world.
A new study by the National Bureau of Economic Research takes a look at one of Mr. Obama’s early stimulus schemes, called “Cash for Clunkers.” The idea was that the government would pay $4,500 to anyone who traded in an old jalopy for a more fuel-efficient model. This $3 billion government program was supposed to give the moribund economy a needed boost in the depths of the Great Recession and attract crowds of customers to dealer showrooms.
Car buyers did indeed crowd into showrooms, eager to cash in the subsidies while they could, and cars flew off the lots at lightning speed for two straight months. Then, for the next nine months, dealer lots were crowded with tumbleweeds. “On net,” the new study concludes, “the program did not result in any more vehicle purchases than otherwise would have occurred over the nine- to eleven-month period that includes the two program months.”
Citing Texas vehicle-registration records, the researchers calculated that families spent an average of $4,600 less, not more, on new cars than they would have if the government had not intervened. The subsidy didn’t save the automobile industry, but took money from the industry — and the pockets of taxpayers.
Mr. Obama will never concede that his Cash for Clunkers was one juicy lemon. He stubbornly clings to the notion that the government is the source of prosperity. “If you’ve got a business,” he said two years ago, “you didn’t build that. Somebody else made that happen.” If Mr. Obama is right that a larger government means more prosperity, everyone would be awash in the green. But the government doesn’t mean that, and no one is awash in the green.
The website cnsnews.com reports that of the $2.8 trillion collected from taxpayers last year, more than $2 trillion was redistributed in the form of benefits, including welfare, subsidized housing, food stamps, unemployment checks, Social Security and Medicare, and that doesn’t count the administrative overhead. The government has been spreading the wealth like never before, and we’re not better off.
Hundreds of billions of dollars are spent trying to make health care “more affordable.” The Bureau of Labor Statistics calculates that the average household expenditure on health care has increased 19 percent under Mr. Obama. That’s just the start. Recipients of subsidized coverage under Obamacare can expect a jarring sticker shock when their rate jumps next year. They’ll have to log on to Healthcare.gov and switch to a lower-cost plan to avoid “auto-renewing” at a higher rate. Surely, the last thing a consumer wants to see again is the log-in screen of that website.
Mr. Obama is far from done with stimulus. He wants more stimulation. “We spend significantly less as a portion of our economy than China does, than Germany does, than just about every other advanced country,” he said last month. He proposes to “Grow America” with $302 billion in spending over four years with schemes to raise taxes and erect tollbooths on every freeway in the nation, all to pay for more bicycle paths, trolleys and trains.
“It’s not crazy,” Mr. Obama, standing under Key Bridge in Georgetown, said last month. “It’s not socialism. It’s not the imperial presidency.” Whatever it is, it’s not good economics, either.